CREDIT CARDS » Credit Card Rates

For too many years the credit card industry has been quite loosely regulated. The credit card industry has been able to change credit limits, fees, and annual interest rates at will and consumers were the ones to feel the effects.In order to put this under control, President Obama recently signed the credit-card consumers' "Bill of Rights." The goal is to provide consumers with relief as fee limitation and contract change notification revisions are part of the legislation.

President Obama stated that this action will provide credit card holders with the "the strong and reliable protections they deserve." The goal is to improve consumer confidence, make consumers more aware of their responsibilities, limit the changes made by credit card companies, and restore balance to the state of the American Economy.

The Bill of Rights legislation:

• Requires credit card companies to first apply payments towards balances with the highest interest rates
• Universal default or the process of raising consumers' rate on existing balances based on late payments to another lender is now prohibited
• Lenders will now need to provide a 45 day advance warning for rate increases
• Upon notification, unless a consumer is 60 days late with a payment, rate increases could not be applied to current balances
• Rate increases can only apply to future purchases

Assuming the bill is passed into law, it will take an additional nine months to come into effect.

What are your thoughts on on this credit card crackdown case?

Many of America's largest lenders are expecting to write off nearly 14% off of their bottom line due to the incredibly high default rates triggered by the current economic crisis. Bank of America recently reported that they are experiencing a13.8% current charge off rate.With more charge-offs affecting the lenders bottom lines, credit worthy consumers are feeling the pinch in the form of higher interest rates, raised fees and reduced line of credits. All of which can ultimately lead to more defaults.

Even the most financially responsible person may end up in default when the economic tide turns against their favor. Although it is not pleasant, it is a survivable situation, and with calculated measures you can manage through these difficult times. If you are on the verge of defaulting on your credit card payment or already have defaulted on your credit card payments, a broad understanding of the situation can help you to deal with the situation better.

• Default is the act of simply failing to make a required minimum payment by the credit card bill date
• Credit card companies can put your account on default status even if you are just a couple of days late with the payment
• In turn, you would get saddled with a default penalty

If that is your case, you should pay your bill immediately, including the fee. However, if you feel that the fee was erroneously charged to your bill, call the credit card company to dispute your concern. The most important thing for surviving a default is by communicating with your credit card company immediately. If you are in a tight position, by letting the credit card company know you are aware of the delinquency of your credit card bill, providing them with a clear cut explanation, or even just letting them know the steps you are taking to rectify your error - is the only way to ensure that the default does not escalate into a bigger problem.

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